IKEA is a Swedish-owned global business founded in 1943. The business generates annual revenues of 27 billion euros and employs 139,000 people in 298 stores and 26 countries. The values and design philosophy of the founder continue to underpin the brand. These values might be summed up as frugal, democratic, environmentally aware, and design oriented. IKEA has become synonymous with Swedish lifestyle.
The stores are virtually identical across the globe and sell a range of globally sourced flat-packed furniture products as well as a range of related furnishings for the home—the stores offer customers a Swedish experience by incorporating restaurants and a variety of customer services intended to simplify the shopping process (e.g., childcare).
What is interesting about IKEA is that customers have become a significant part of the value creating process—customers play a key role in terms of logistics and in production. By performing the assembly of the flat-packed furniture, customers complete the final stages in the production process. In terms of logistics, the customer “moves” goods from warehouse-style storage through the checkout, and then transports the goods home. The trade-off for the consumer is lower prices and immediate gratification—furniture is typically sold using just in time (JIT) inventory management, which means that once a customer has placed an order, the furniture then goes into production and is delivered to the customer’s home some 3–4 months later.
IKEA’s senior management has in the past pursued an aggressive expansion policy, but management is currently changing direction, adopting a slower rate of expansion and investing in existing stores. The company plans to increase sales by 10% a year to 2020, thereby doubling annual sales revenues.
Management is concerned about how expansion in the BRIC countries, particularly India and China, is pursued. There are fears about preserving the company’s culture in these huge markets (Milne, 2013).
Milne, R. (2013, September 1). Ikea signals slower expansion. Financial Times.
What do you think? What would you do? What problems do you foresee and how will this impact IKEA’s Swedish concept? Please recommend a marketing solution that will help IKEA achieve growth in either India or China based on your understanding of the place “P” and how delivering the value is evolving.
Please use the case study guidelines below to perform a brief analysis, identify the problem, suggest alternative solutions, and make recommendations for the implementation of the solution that you believe is the best fit.
Case Study Guidelines
1.Analysis of the Current Situation—The proper context must be established for the case analysis. Please provide a SWOT analysis in a SWOT box.
•Research: Identify the key environmental factors such as industry trends, level of competitiveness, customer perceptions, legal considerations, and evolving technology at the outset of the analysis. (Refer to the macroenvironmental forces that cannot be controlled by the marketer – what are these forces with which IKEA must deal as IKEA looks to accomplish its goals? Provide a
SHORT description of the marketplace in which IKEA finds itself.)
•Summarize the key aspects of the internal environment of the firm in terms of strengths and weaknesses and the external environment in terms of opportunities and threats to the firm in your SWOT box.
(Refer to the S.W.O.T. Information provided you in the MKTG522 IMC Plan Key Content Considerations. Ensure you understand what constitutes STRENGTHS, WEAKNESSES, OPPORTUNITIES, and THREATS – demonstrate application of this Word DOC.)
2.The Target Market—Identify your target market: Who is your target customer? In terms of demographics and lifestyle, what aspects of consumer behavior provide insights into this group of customers?
(Refer to what constitutes good segmentation variables – what are the specific demographics, geographies, psychographics, etc., that might apply here. Demonstrate your ability to describe segmentation variables that aptly describe your desired target market.)
3.The Problem—Identification of key problem(s). It is easy to identify symptoms of problems while failing to identify the real problems. For example, declining sales may be identified as a problem, when the decline is only symptomatic of more complex problems that are harder to observe. Make a clear distinction between what is identified as the problem and the symptoms of the problems.
(As you identify your “Problem,” ask yourself “what is causing the problem I have identified”? If you come up with an answer, what you defined as the “Problem” may actually be a SYMPTOM of that problem. You want to determine the PROBLEM. Thus, keep drilling down to find THE problem.)
4.Alternative Solutions—Identify and evaluate alternatives. Develop reasonable alternatives and evaluate them in terms of feasibility, projected costs advantages, disadvantages, and potential short-term and long-term consequences.
(This is where you demonstrate strong graduate-level thinking! Read the above paragraph. It is self-explanatory. Be sure to weigh the pros and cons of your alternative solutions. Go into adequate detail.)
5.Recommended Course of Action—Select a course of action and provide the appropriate strategies and tactics to accomplish the chosen course. Justify your choice in terms of your analysis. As most practitioners know, charting a course of action can be a difficult job, but implementation is the true challenge. Produce a workable action plan that would have a reasonable probability of success in the implementation phase.
(As you develop your Course of Action, remember to think “big picture” – how does your Course of Action impact IKEA several years down the road? You always want to be ‘thinking ahead’.)